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Investing.com - Mizuho raised its price target on Credo Technology Group Holding Ltd (NASDAQ:CRDO) to $155.00 from $135.00 on Thursday, maintaining an Outperform rating following the company’s better-than-expected quarterly results. The $21.5 billion market cap company has shown impressive momentum, with InvestingPro data showing a remarkable 298% return over the past year. According to InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value.
Credo reported July quarter results significantly above consensus with revenue of $191 million and earnings per share of $0.35, while guiding October quarter revenue to $235 million, approximately 15% above the consensus estimate of $202 million. The company’s strong performance is reflected in its impressive 126.34% revenue growth over the last twelve months, with InvestingPro analysis revealing 9 analysts have recently revised their earnings estimates upward.
The company expects fiscal year 2026 revenue to grow approximately 120% year-over-year to about $964 million, driven by strong cloud service provider ramps and pull-ins, with a fourth hyperscaler now ramping and expected to represent more than 10% of revenue for fiscal 2026.
Gross margin reached 67.6% in the reported quarter, though management reiterated expectations to remain near the long-term range of 63-65% due to product mix, while the company’s Optical DSP business is on track to double revenues in fiscal 2026 with an expanding customer base. This aligns with the company’s consistent track record of maintaining strong gross margins, currently at 64.77% for the last twelve months.
Mizuho highlighted that Credo’s Active Electrical Cable (AEC) revenues for fiscal 2026 are projected at approximately $700 million, which remains small compared to an estimated $2.7 billion AEC market by fiscal 2028, assuming conservative 12-15% penetration of a roughly $22 billion scale-out cable market.
In other recent news, Credo Technology Group Holding Ltd reported its first-quarter results for fiscal year 2026, which surpassed expectations. The company achieved earnings per share of $0.52, significantly higher than the projected $0.35, and reported revenue of $223.1 million, exceeding the anticipated $190.63 million. Following these results, Needham raised its price target for Credo Technology to $150 from $85, maintaining a Buy rating due to the company’s strong performance and raised guidance. Credo now forecasts a fiscal year 2026 revenue growth of approximately 120% year-over-year, prompting Needham to increase its revenue estimate by $155 million. Additionally, BofA Securities increased its price target for Credo Technology to $165 from $120, also maintaining a Buy rating. BofA highlighted Credo’s active electrical cables as a key factor in its decision, noting their effectiveness in AI clusters. The firm positioned Credo as one of its top four AI-leveraged stocks, alongside NVIDIA, Broadcom, and AMD. These developments reflect a positive outlook from analysts following Credo’s recent performance.
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